Mammalian carbonic anhydrase isozyme III possesses both carbon dioxide hydratase and esterase, a characteristic of all seven of the known isozymes of carbonic anhydrase. However, isozyme III is unique in also demonstrating phosphatase activity, of a type which was recently shown to fall into the class of the dual-specificity protein phosphotyrosyl phosphatases. Biochemical studies also showed that glutathiolation was involved in the reversible regulation of this phosphotyrosyl phosphatase activity. Glutathiolation of Cys-186 is required for phosphatase activity while that of Cys-181 blocks activity. The gene for rat liver carbonic anhydrase III was therefore obtained by PCR cloning. The protein was successfully overexpressed in Escherichia coli, and its specific activity was the same as the rat enzyme for both carbon dioxide hydratase and esterase activities. However, no phosphatase activity was detectable. Recognizing that this might be due to a post-translational modification in the eukaryotic protein, the recombinant was expressed in insect Sf9 cells utilizing a baculovirus vector. Despite repeated efforts, the level of expression remains low, and it appears that this expression system will not yield sufficient protein to support investigation of the phosphatase activity. We therefore returned to preparing the enzyme from rat liver, with the purpose of understanding the differences between the active phosphatase obtained from rat and the inactive recombinant obtained from E. coli. The previous purification procedure has been extended and improved, allowing isolation of a fraction containing high specific activity phosphatase. We found that this fraction contains a co-purifying, lower molecular weight protein whose presence had been missed in previous preparations. It was purified and identified as liver-specific fatty acid binding protein. Reconstitution and cross-linking studies are in progress to probe the possible role of this ancillary protein in the protein phosphatase activity. Immunoprecipitation studies will be pursued as well, especially since they may allow clear separation of phosphatase and hydratase activities.